The Value Relevance of Accounting Information in Times of Crisis: An Empirical Study

Lars Mion, Georgios Georgakopoulos, Petros Kalantonis and Nicolaos Eriotis
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Lars Mion: Department of Financial Accounting, University of Amsterdam, Amsterdam, Netherlands
Georgios Georgakopoulos: Department of Accounting and Finance, University of Strathclyde, Glasgow, UK
Petros Kalantonis: Department of Business Administration, Technological Education Institute of Piraeus, Piraeus, Greece
Nicolaos Eriotis: Department of Economic Sciences, National & Kapodestrian University of Athens, Athens, Greece

International Journal of Corporate Finance and Accounting (IJCFA), 2014, vol. 1, issue 2, 44-67

Abstract: The financial crisis started in 2007 with the credit crunch persists until today in the form of the European debt crisis. The main focus of this paper is the relevance of financial statements in determining firm market value in such times. The work contributes to this research stream as one of the earliest studies probing into the effects of the credit crunch and the euro-debt crises. This paper examines a sample of firm year observations from 2003 to 2011 of companies listed in the Amsterdam Euronext exchange. It focuses on the relation between market values and both book values and net income measures. The findings suggest that the combined explanatory power of the independent variables decreases in the years marked as crisis years. Net income leads to less value relevance high lighting the importance of book values. Incremental explanatory power of book values increases during the credit crunch, and decreases afterwards.

Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:igg:jcfa00:v:1:y:2014:i:2:p:44-67

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